In Appalachia, coal struggles to compete with cheap natural gas

Coal (KOL) has regained a little ground this year as the fuel of choice for U.S. power plants, but not in Appalachia, where natural gas for electricity generation has become very cheap.

So much gas is being pumped from the Marcellus Shale, and so few pipelines serve the area, that a glut has developed in Pennsylvania and West Virginia, driving down the price of electricity and making it hard for coal to compete, WSJ reports.

FirstEnergy (FE) stopped generating power in October at two plants in the area, and AES has told regulators it may close its Beaver Valley coal plant near Pittsburgh; analysts think more closures are likely in the region.

As natural gas prices have crept up closer to $4/M BTUs, coal recovered some of its market share, but gas in Pennsylvania is going for as low as $1.83; the longer gas and electricity prices stay low, the more likely it is that commercial coal plant owners could shut plants or file for bankruptcy.